The Pros and Cons of Managing Your Own Investment Property
Managing your own investment property? It’s something every landlord thinks about, but is it a realistic option? Let’s work through some of the pros and cons!
PRO: YOU’LL SAVE MONEY ON FEES AND REPAIRS
You’ve dropped your hard-earned savings on a significant asset, so you want to hang on to whatever is left. By managing a rental property yourself, you’ll undoubtedly save on property management fees. After all, on average good Property Managers in Brisbane charge between 7 – 8½ % of the weekly rent to manage your property!
Not only that but if you’re handy with tools, you can tackle minor repairs and maintenance yourself.
Forget Jim’s Mowing, you’ll have a new weekend gig whipper‑snipping your tenant’s lawns!
But before you decide whether you’ll genuinely reap a better result by going it solo, you will want to weigh up the costs and benefits.
While a property manager charges fees, they also provide considerable value.
For example, they save you the hassle of collecting rent, marketing your property, screening tenants, and drawing up leases.
It’s vital to avoid the false economy trap, where it ends up being less cost-effective for you to self-manage your property than outsource it.
Calculate how much you’re paid per hour in your primary breadwinning role. Then work out how much time you’ll spend running your rental. Be realistic: are you better off paying for an expert property manager instead?
How long will it take you to market your rental, for example – taking photos, uploading them online, writing an appealing description?
How about screening a tenant, collecting and processing their ID, calling referees, checking their tenancy history, and so on?
And conducting two-to-four in-home inspections a year?
Then there’s repairs, admin tasks, and more. Plus are you planning to manage one, or multiple properties over time?
CON: PROPERTY MANAGEMENT IS TIME-CONSUMING
In essence, the amount of time spent on tenant supports and administrative tasks is why property managers are paid to coordinate these specialised services.
We all have our strengths. If you’re Ms or Mr. Fixit, you might look forward to the challenge of replacing your rental asset’s leaking showerheads, shattered ceramic cooktops, and broken dishwashers.
If you’re an accountant, you may leap with joy at the prospect of month-end rent reconciliations, and debt collection for non-payment of rent.
Of course, you can outsource those tasks, but why selectively pay for some aspects of property management and not the whole package?
Some newer landlords don’t factor in just how much time is needed on all the diverse aspects of the job.
Unfortunately, the current COVID‑19 pandemic is a reminder of how valuable our time is and how quickly a crisis can spring up.
In the event of an emergency or natural disaster, a property manager will save you precious time. They can be on hand at the residence quickly, while you might be tied to your job or other commitments. Time is the most valuable resource we have, so don’t sell yourself short.
PRO: STREAMLINED COMMUNICATIONS WITH TENANTS
On the other hand, the advantage of being property manager of your own rental residence is that you hold the reins with tenant communications.
If you need to get in touch with a tenant quickly or get into the property ASAP, there’s no need to go through an agent first.
A big plus? When a tenant gives notice, you can move quickly to fill the vacancy and show the house while it’s still occupied. Some agents prefer to run open homes in a vacant property.
You are in the driver’s seat for screening potential tenants. It’s entirely your call when it comes to choosing honest, reliable people who will treat the property like it’s their own home.
On the flip side, if you plan to sell the property, you’ll need a firm grasp of the rules and regulations about notifying tenants of your intentions.
A great property manager makes tenants feel welcome – while preserving boundaries. So there’s a fine art to handling communications sensitively when you are selling a place that feels like their “temporary home”.
At Realty8, we know that transparency and relationship management is the ticket to stable long‑term tenancies. Keeping the lines of communication open with both landlords and tenants is a good way to stop problems before they start.
CON: SERIOUS TENANT DISPUTES
Say you’ve lovingly renovated your new investment property in Mount Gravatt, Mansfield or Wishart.
Next, you’ve found a great tenant and are on good terms with them. But a month later, you get a call from them saying there’s mould in the freshly updated bathroom.
Just whose responsibility is it to fix – yours, or the tenants?
You might be thinking, but I just renovated it!Weren’t they ventilating the room properly?
Mould however can be caused by a structural fault, which causes moisture to build up. And so the debate starts …
This is exactly the kind of issue that a property manager mediates and solves on a daily basis. It requires solid understanding and application of property legislation and tenants’ rights.
The Queensland Residential Tenancies Authority identifies more serious problems that can arise between landlords and tenants, for instance:
The tenant breaches the agreement
The property becomes unliveable
There is a crime or domestic violence in the property
Non-payment of rent.
Expert conflict resolution skills are vital. Are you a switched-on mediator? If not, it’s like riding a motorbike when you’ve only driven a car before. You get the basics, but it’s safer to leave it to an expert.
WRAPPING UP …
In many ways a top-notch property manager is a Jack (or Jill) of all trades. If you’re multi-skilled, managing your own property could be another feather in your cap.
But as expert agents, Realty8 knows property management is not the same as property investment: you just cannot “set and forget”.
If you enjoy your weekends and want to save your weeknights for the kids’ homework and Netflix, it’s best to be realistic about the time commitment involved. Have a chat to us about managing your rental, so you can focus on the other things you love.
Royden is the principal and founder of Realty8. He is a Fellow of CPA Australia (FCPA) and holds a Business degree from the Queensland University of Technology. Royden is an avid reader and is a passionate hobby photographer. However, his real passion is Real Estate and Property Management in particular.